India: Chennai's ferrous scrap prices slide by INR 200/t w-o-w on moderate steel demand - 26 Dec

According to BigMint's latest market analysis, the price of HMS (80:20) has experienced a decrease of INR 200/t on both a w-o-w and d-o-d basis, settling at INR 30,700/t in Chennai, India. In contrast, billet prices have shown a reduction of INR 500/t on a d-o-d basis, bringing the price to INR 41,500/t. On a w-o-w basis, billet prices dropped by INR 400/t.

Rebar prices remained stable on a d-o-d basis at INR 46,000/t but fell by INR 300/t on a weekly comparison. The market is in a cautious state, with trade activity staying at moderate level. The ongoing rainy season is also affecting steel demand, leading to subdued market conditions.

Imported, domestic market trends

According to a scrap trader, shredded offers from Australia are currently at around $380-385/t, CFR Chennai. Meanwhile, offers for HMS 80:20 stood at around $365-366/t. around 1,500 t Australia origin shredded deal heard recently at $382/t CFR Chennai.

In the domestic market, HMS (80:20) prices were recorded between INR 30,500 and INR 31,000 per tonne for buyers who made payments within seven days. For those opting for extended payment terms, the prices increased to a range of INR 31,000 to INR 31,500 per tonne. The majority of offers were concentrated within the INR 30,500 to INR 31,000 per tonne range, with most transactions occurring at this price point.

Buyer-supplier sentiments

A mill representative recently informed BigMint that trade activities in the steel sector have experienced a slowdown since the previous month. Both major project sales and retail transactions have been sluggish, resulting in a decline in demand for finished steel. Furthermore, the ongoing rainy season in Chennai has led many key buyers to delay their procurement plans, further contributing to the subdued market conditions.

Another market source reported that major mills are currently operating at approximately 50-60% of their production capacity. Meanwhile, inventory levels of finished steel continue to rise. While domestic scrap supply remains at a moderate level, the reduction in production at mills has resulted in sufficient availability of scrap to meet current needs.

According to a scrap supplier, the prices for HMS 80:20 scrap are currently ranging between INR 30,500 and INR 31,500 per tonne, depending on the payment terms. The market is currently experiencing a liquidity crunch, which has led to slower trade activity over the past few weeks. Additionally, there has been an increase in the consumption of sponge iron in the charge mix during this period.

Regional comparison

In the Jalna market, billet prices dropped by INR 100/t to INR 41,700/t, and rebar prices fell by INR 300/t to INR 47,200/t, while HMS 80:20 scrap prices held steady at INR 32,200/t. The market experienced moderate trade activity in finished steel, with scrap prices remaining range-bound. Most buyers' bids for scrap were reported between INR 32,000 and INR 32,500/t. Despite this, liquidity concerns continued to impact the market.

Outlook

Despite the current slowdown, scrap prices are anticipated to remain within a relatively narrow range in the near term, with potential fluctuations of INR +/- 500 per tonne. These fluctuations will be influenced by prevailing market conditions, which may affect price stability in the short term.